Multi-Organization Letter Supporting H.R. 527, the Small Business Regulatory Flexibility Improvements Act

Tuesday, February 3, 2015 - 5:30pm

Dear Representative:

We are writing to express our support for H.R. 527, the Small Business Regulatory Flexibility Improvements Act of 2015. This bipartisan legislation would reform the regulatory process to ensure that all federal agencies appropriately consider the impact of their rules on small businesses across America. As a result, federal agencies would issue smarter regulations that minimize inefficiencies and unnecessary burdens while still protecting public health, worker safety and the environment.

Small businesses are the backbone of the nation’s economy. According to the U.S. Census Bureau, there were over 28 million small businesses employing 55 million workers, or about half of all private sector employees. These firms are responsible for 59 percent of all net new jobs from 2010 through 2013, yet they are disproportionately impacted by compliance burdens associated with regulation. A recent study found that small businesses pay $11,724 per employee per year in regulatory compliance. Their ability to operate efficiently and free of unnecessary regulatory burdens is critical for their ability to compete and create jobs. The Act directly addresses that small business challenge.

H.R. 527 would improve and modernize the Regulatory Flexibility Act (RFA), a 1980 law that requires federal agencies to transparently account for the impact of regulation on small businesses. However, each agency interprets important terms in the existing statute in widely divergent ways and is able to avoid the RFA’s requirements as Congress intended. This bill would streamline and make uniform those determinations of when the RFA would apply to a rule.

Despite limited adherence by federal agencies to the RFA’s provisions, the RFA has yielded billions in savings for small businesses. In fiscal year 2014, the U.S. Small Business Administration’s Office of Advocacy reported compliance cost savings of $4.8 billion for small businesses. Over the past ten years, the small business compliance cost savings due to the RFA is greater than $90 billion. These savings were derived from a small number of regulatory alternatives that were less costly to small businesses. If all federal rules with small business impacts included the type of analysis required by this legislation, the savings could be significantly higher and our regulatory system could more efficiently meet our objectives.

Many rules that have significant impacts on small entities are not covered by the RFA because the small businesses adversely impacted are not directly regulated entities. The Act would require agencies to consider the true impact of their rules on the regulated community. It also would give the Office of Advocacy additional authorities and require it to establish standards for conducting a regulatory flexibility analysis during the rulemaking process. H.R. 527 improves transparency and ensures that agencies thoughtfully consider the impact of regulations on small businesses.

The organizations represented on this letter cover virtually every sector of the small business community. The Small Business Regulatory Flexibility Improvements Act would help alleviate unnecessary regulatory burdens placed on small businesses. We urge your support for this commonsense bipartisan legislation.